June 13, 2024

American Higher Education Bubble

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With eight of the top ten universities listed in the world by 2022, the United States has been an international figure in higher education for decades – bringing together the Crown Jewelry Organization, represented by the Ivy League. Other companies, the famous Harvard, Yale and Columbia.

Unlike Brazil, large American universities, medium and small colleges are often private: Scholarships are, in principle, awarded on the basis of merit, while the remaining students have to accept the cost of the chosen course. A simple and efficient gear, within two decades, has become an economic snowball that has not stopped growth due to a combination of mismanagement and ideology.

About 44 million Americans owe more than $ 1.7 trillion to the US government – more than the equilibrium of Brazil’s GDP in 2021, which is estimated at $ 1.6 trillion. These are mostly young people and adults who have been in higher education for the past decade; Graduates, masters and doctors who borrowed about 50 thousand dollars (approximately 240 thousand rice, approximate price as of the date of report) for their titles, did not find a place in the job market and did not know how they were. Will pay off the debt.

As a radical faction of the Democratic Party, along with other activist groups, he is urging President Joe Biden to fully pardon the trillions of dollars – even appealing for “racial justice” – as frustrated students and parents face passing questions. Easy Solutions: Is Increasingly Expensive, Partisan Higher Education Still Worthless, With No Guarantee of Financial Income? If the amount of debt does not decrease, who will repay the next loan? For Brazilians, this begs the question: What should the American student financial crisis teach us about the future of education in the country?

The Intervention Spiral: From Obama’s blank check to Mass Default

The Path of Crisis is a true portrait of the “whirlwind of interventionism” predicted by the Austrian economist Ludwig von Mises, in which the Left seeks to create new state interventions to repair the disasters caused by its own work. Loans from private banks and guaranteed by the federal government, tailored to the needs of the client, created the Student Finance System in the United States in 1965 and lasted more than four decades, reaching a value of $ 500 billion. Everything changed when Democrat Barack Obama came to the White House.

Beginning in 2010, the U.S. government became the sole lender of student loans, in the words of former Donald Trump Executive Education Secretary Betsy Devos, “a complete federal takeover of the organization.”

“The Department of Education is responsible for the largest portfolio of total federal government direct debt. Federal student loans are the second largest source of consumer debt in the United States, behind mortgage lending. Davos writes of his new book “Hostages No More” (“No Hostages”, without a Portuguese translation), which was published this month and was originally obtained by People’s Gazette.

The result: in just six years – from 2007 to 2013 – the value reached trillions. Faced with dire consequences, the Democratic administration doubled the vicious cycle of interventionism and redoubled:

“Instead of the usual ten-year fixed fee plan, students were offered a new fee plan option based on how much they earn after graduation. More and more people are using this system. When the government gives loans and tells the borrowers that they do not have to pay, there will be a shortage. And someone will pay the bill, “the former secretary explains.

Finally, in March 2020, at the beginning of the corona virus crisis, student loans with the federal government reached $ 1.6 trillion. All this at the expense of low-income families:

“The media wants everyone to believe that student loans are primarily for the poor. That would be false news. According to the Federal Reserve, the first 40% of debtors’ families make up almost 60%. More than half of the total outstanding student loan loans come from postgraduate families,” he said. This is only 14% of all American households.

The problem of elite overproduction

The crisis in American universities has another bad factor: the university-like failure to train students into the job market, which cannot accommodate all the graduates who graduate each year. The vicious cycle of loans, after all, does not guarantee the quality of the programs offered or the teachers – nowadays, it does not even guarantee that students are free to discuss anything they want.

“There are more than 11 million vacancies in the United States, and the official unemployment rate is 3.6%. In general, the goal of four-year colleges is to produce well-rounded students rather than train for a career. Graduates often reject ‘manual jobs’ and outnumber political positions in Washington. Young people should choose cheaper business schools over four years of liberal art shows, ”explains Adam Kissel, an education expert at the Heritage Foundation. People’s Gazette.

“Large federal student loan grants have prompted universities to raise prices. When students pay more for college degrees, they leave believing they deserve elite jobs. Colleges maintain these pretensions by teaching that they will become part of the elite and participate in it. .Many graduates believe that a college degree gives commanding status to the less educated, ”Gissel said.

The scene also refers to the idea proposed by the Russian-American scientist and statistician Peter Turch: the overproduction of the elite. As for trauma, it is a problem at the root of the fragmentation of society and a trigger for serious crises.

“The waves of political instability in the past, such as the civil wars of the late Roman Republic, the French religious wars and the American Civil War, had many causes and circumstances peculiar to their time. Is a decline and an increase in state debt, “the scholar explained in a 2013 article.

“Elite overproduction often leads to intra-elite competition, which gradually undermines the sense of cooperation, which is followed by ideological polarization and fragmentation of the political class,” Durchin predicted. Therefore, any relationship with the contemporary political context is not a mere coincidence – or with the Brazilian context, for many years We need to train doctors for unemployment, For projects that are supported by the scraped public universities at the expense of the poor or for financing projects that can be completed as in the United States. The solution, however, does not include the complete elimination of higher education.

“The American university ecosystem is very different. Many colleges have gone down an ideologically irreversible path. Instead of trying to reform them, it would be better to build around them like the new Austin University. [a “universidade dos cancelados” – leia aqui a reportagem]And to create alternative credentials such as changing the metric of diplomas with learning ability, “Kissel proposes.” Furthermore, government funding is expected to shift dramatically from four-year colleges and two-year technical colleges to universities. ” .

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